Shots:
- Kyle Forcier, Sr. Director of Life Science Product Marketing at Model N, addresses the challenges of the 340B program and ways manufacturers can mitigate them and emerge stronger
- 340B, a US federal government plan, enables eligible healthcare organizations and covered entities to receive outpatient drugs from drug manufacturers at significantly low prices
- Kyle recalls an incident where one Model N customer was able to detect duplicate payment of sales with Model N’s new 340B vigilance product
Saurabh: Can you explain the 340B program?
Kyle: 340B is a federal program that requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to eligible healthcare organizations that care for a significant share of the nation’s underserved populations, including children, uninsured and low-income individuals, rural communities, and cancer patients. The 340B price is the difference between the average manufacturer price (AMP) and the unit rebate amount (URA).
Saurabh: How does the program impact patients and healthcare providers?
Kyle: The program helps save lives by providing patients with affordable medications. The 340B program has also generated billions of dollars in savings, allowing organizations to stretch limited resources to offer additional patient services, such as free or discounted care, mental health services, and free vaccines. Nearly three-quarters of critical access hospitals (which are predominantly rural) reported needing these savings to stay open.
Saurabh: What challenges do pharmaceutical manufacturers face when participating in the 340B program?
Kyle: The program has grown significantly in recent years. With contract pharmacy participation increasing by more than 4,000% since 2010, pharma companies face challenges tracking which drugs are being dispensed under 340B and which are not. Reconciling who is using which product for which facility under what price is impossible to track manually, leading manufacturers to provide duplicate discounts and lose significant revenue.
Manufacturers are responsible for communicating their 340B quarterly pricing to wholesalers and distributors. If there is a delay or breakdown in the pricing update, sellers may not invoice covered entities (CEs) at the correct price – leading to errors and potentially heavy fines. With so much information to manage, adhering to this requirement is extremely difficult.
Saurabh: What role does technology play in a successful 340B program?
Kyle: With so many moving pieces and massive datasets, technology is imperative for effective 340B management. First and foremost, manufacturers need a single system of record to track CEs, manage CE and contract pharmacy identifiers, and store sales and price data.
Technology can manage the chargeback process by calculating correct drug prices, confirming a health facility’s 340B eligibility, analyzing transaction data, and flagging when duplicate discounts occur. These tasks are very time-consuming and error-prone when done manually.
Saurabh: Inaccurate data can lead to lost revenue. How can manufacturers effectively identify prescriptions ineligible for rebates and prevent overpayments?
Kyle: To prevent overpayments, manufacturers can use a comprehensive data validation system. Pharma companies must collect sales data from distributors and covered entities to determine who bought what at what price.
From there, companies can crosscheck listed healthcare facilities with a CE database. Companies can also compare CE data with Medicaid and commercial insurance claims to determine if rebates are owed. By validating the data, drug manufacturers avoid paying duplicate rebates and identify instances of double payments.
Saurabh: Can you provide examples or case studies of pharmaceutical manufacturers who have successfully navigated the challenges of the 340B program?
Kyle: One Model N customer, a large pharmaceutical company, uses Model N’s new 340B Vigilance product to collect data from CEs and compare it to Medicaid and commercial claims. The system flags duplicate payments or sales not eligible for rebates, preventing double discounts or allowing companies to address overpayments. The customer is saving money and more efficiently and effectively managing its rebates.
Saurabh: How can the government pricing process be streamlined to improve efficiency and effectiveness?
Kyle: Companies can leverage a revenue optimization solution to automate 340B price calculations to accelerate the process and ensure their pricing is correct.
About the Author
Kyle Forcier is a Sr. Director of Life Sciences Product Marketing for Model N. For more than 15 years, Forcier has focused his time in the life sciences space helping manufacturers increase their revenue, maintain compliance, and bring innovative ideas to the marketplace. He currently helps shape Model N’s strategic direction focusing on bringing complex, valuable solutions to the market to solve long-standing operational challenges within the medtech industry.
